5 Little-known Steps To Maximise Development Yields
A scarcity of available land in Australia’s urban centres opens up numerous opportunities for investors, but failure to unlock the true potential of development sites can lead to financial devastation. Developers moving forward without properly scoped out feasibility studies prepared by local experts on the ground put themselves at risk, especially in a country where planning laws vary state by state. A properly informed study gives a more reasoned understanding of what a site will yield (e.g. the potential number of storeys a development can go to, or the number of individual residential development sites) and a true planning professional will provide realistic project timeframes to assist with planning. Expert assistance from the outset aids developers to see beyond blank canvas sites to higher yielding projects that may have been outside their original scope, including these five little-known steps:
1. Permitted sites
Rather than starting from a blank canvas, developers can avoid planning risk by opting to take up sites that already have permits in place. In this way, they can amend existing approvals rather than starting from scratch, maximising opportunities to upsize planning in cases where local laws have changed since initial permits were granted. You may be able to build to 15 storeys rather than 10, or get more residential allotments from a development site.
2. Re-zoning land
More complicated than merely altering the scope of a planning permit, you will need good reasons to cite for re-zoning land but that’s not to say it’s not impossible - and if achieved, can work greatly in your favour. This is especially worth considering in areas once zoned for commercial development, but now more suitable for higher and better uses including residential dwellings in areas undergoing gentrification.
3. Site consolidation
Becoming more and more common in centres such as Melbourne, site consolidation is occurring throughout areas requiring higher density dwellings. It’s extremely rare that one common space is available for such development - instead, up to three quarter-acre house blocks are being sold in tandem to developers seeking sufficient land to build up to 40 or 50 apartments. This kind of site consolidation is effective at breaking the planning nexus and concurrently solving housing demand.
4. Surplus or under-used land
Publicly advertised government land sales commonly occur as statutory authorities seek to divest of under-utilised assets. Varying in size from large land-holdings to those that are very small, these sites may have been held for 20 years or more. Proving exceptionally valuable in our land-locked capital cities, these opportunities offer great potential for developers seeking projects in densely populated areas requiring extra dwellings to cater for local demand.
5. Maximising public contribution
Mandated by state planning legislation, publicly disclosed developer contributions are an additional charge that provides benefits to local communities to assist with the creation of local infrastructure. Opportunities exist to increase your public contribution in return for a higher yielding project. For example, you may be able to add an extra storey to an apartment block in return for providing a public plaza within your development - a win-win for all involved.
More challenging in nature but potentially offering larger scope and less risk than other developments, the strategies outlined above must be undertaken with professional assistance in order to maximise their profitability. Any associated costs will far be outweighed in terms of your end result, most often beyond the realm of what you originally imagined. Don’t be caught out by being unprepared - make the required effort to work through the steps of due diligence and feasibility studies to high-yielding development success.